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Humbled by production challenges, the company plans to scale back production goals, it told investors Thursday.

In its early years, biotech company Amyris described itself as a start-up “applying its proprietary breakthrough technologies to address major global health and energy challenges.”

Its originally planned to make an anti-malaria drug, as well as renewable diesel and jet fuel, by feeding sugar to genetically-engineered microorganisms. Having spun off the anti-malaria technology to another company in 2008, yesterday Amyris said it’s giving up making fuels too. Instead, it will to focus on higher value products, such as moisturizers for cosmetics.

The company learned firsthand just how difficult it is to achieve the kind of yields seen in lab tests in large-scale production. In an update call for investors, CEO John Melo said he is “humbled by the lessons we have learned.”

This is a common theme for advanced biofuels companies. Range Fuels, one of the first of the current crop of companies, recently went out of business. Others are giving up on making biofuels too, also hoping to break into markets for higher value chemicals. Although they may be able to get more money per liter of product, some experts warn that these markets are also highly competitive.

Amyris’s technology may still be used to make renewable fuels, but this will happen not at Amyris, but under joint ventures established with Total and Cosan. These ventures will need to build up their own production capacity, Melo told analysts.

On the same call, Melo told investors not to expect the company to produce as much product as it had previously promised. Amyris had said that in 2012 it would produce 40 to 50 million liters of farnesene, a fragrant oil that can be used for making various products including diesel. Melo said Amyris would stop making predictions about its production levels, turning its attention away from ramping up production and toward achieving consistent yields. He also said Amyris is indefinitely delaying plans for one of two large production facilities it was to have built this year.

Not all biofuels companies are backing off from biofuels though. Mascoma, which has developed a process for making ethanol from cellulosic sources such as wood chips, announced in December that it had fully funded the construction of a cellulosic ethanol plant. Construction is expected to begin within a few months, to be completed by the end of 2013.

Update, 2/14/2012 :

Amyris wants to make clear that it isn’t giving up on its current, relatively small scale, biofuel production. Some of the farnesene Amyris makes is being used to make diesel fuel for buses in Brazil, and Amyris will continue to make farnesene for fuel until the joint ventures are up and running, says Joel Velasco, senior vice president for external relations. As Amyris adds more farnesene capacity this year, some of that, too, could be used for the production of fuel, he says.

While Amyris doesn’t disclose precisely how much fuel is made from its farnesene, based on the number of buses it supplies, Amyris seems to be making a few hundred thousand liters of fuel per year. Commercial fuel production, to make economic sense, typically needs to be on a much larger scale—hundreds of millions of liters per year.

Amyris had generated excitement in recent months when it announced would produce 40 to 50 million liters of farnesene in 2012, and build two plants with a total capacity of 150 million liters. Although Amyris had made clear that not all of the production would go to biofuels, the plants were some rare positive news in the advanced biofuels industry, which has been plagued by bankruptcies and delays.

But now Amyris has given up on its 40 to 50 million liter prediction, and indefinitely delayed construction on the larger of the two plants it had planned. Large scale biofuels production awaits construction of facilities by the joint venture companies. That construction seems unlikely to happen in the near term in light of the difficulties Amyris is having in achieving its announced goals this year. The promise of large scale biofuels is still some time off.

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My reporting as MIT Technology Review’s senior editor for materials has taken me, among other places, to the oil-rich deserts of the Middle East and to China, where mountains are being carved away to build the looming cities.… More

Growing up, I lived for a time in the Philippines, where I knew people who lit their tiny homes with single lantern batteries or struggled to breathe through the dense diesel fumes of Manila, so I have a feel for the pressing need around the world for both cheap energy and clean energy.

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